Asia Summary and Highlights 12 July

Asia Session

After the slump triggered by U.S. CPI and potentially exacerbated by BoJ's intervention (which is somewhat denied by Kanada as he said he is "puzzled" by media report BoJ intervened), USD/JPY slumped again in the early hours on Friday. Once again the liquidity is thin, seems like a good time for a cost efficient intervention. However, with the fog of war cleared, it seems to be a rate check from the BoJ that spooked the market, instead of an actual intervention.  With more verbal intervention in the Asia morning, there is destined to be more volatility in the USD/JPY space as we see a rebound of 0.22% currently to 159.10 with JGB yields fallings.

Risk sentiment is mixed with Nikkei falling more than 2% and HSI up more than 2%. Chinese equity is just in the red wile U.S. three major equity indexes are little changed individually. AUD/USD benefited from softer USD and is trading 0.14% higher at 0.6769, NZD/USD is also up 0.1% while USD/CAD slipped 0.09%. Else, EUR/USD is up 0.03% and GBP/USD unchanged.

North American session

US CPI came in weaker than expected at -0.1% with the ex food and energy rate up only 0.1% and 0.065% before rounding. The USD fell sharply on the release most notably USD/JPY which plunged to a low of 157.44 from around 161.60 and remained below 159 even as the USD moved off its lows. EUR/USD saw a high of 1.09 from 1.0845 ahead of the data but drifted back to 1.0865. EUR slipped marginally versus the GBP while EUR/CHF slipped as low as .9710 from .9750, but erased most of its losses in late trade.

Equities slipped putting pressure on the commodity currencies. AUD/USD and USD/CAD both ended little changed with the latter fully erasing its reaction to the US data, AUD/USD finding sellers at .68.

Initial claims were overshadowed by the CPI but were lower than expected at 222k from 239k. Later in the session Fed’s Muslaem and Daly welcomed the CPI but gave no hints that a near term easing was being considered.